Transactions - JULY 10, 2014

Vornado buys another NYC property for $700m

by Andrea Waitrovich

Vornado Realty Trust, in partnership with Crown Acquisitions, has agreed to acquire the retail condominium of the St. Regis hotel and the adjacent retail townhouse in New York City. The sales price was $700 million, or $28,226 per square foot.  The seller was luxury goods firm Richemont, which acquired the asset in 2012 for $380.6 million.

The purchase is expected to close by early fourth quarter of this year, subject to customary closing conditions.

Vornado will own between 67 percent and 80 percent, with Crown owning the balance. The final ownership percentages will be based on the amount of debt financing put on the property and Crown’s short-term option to invest additional capital.

The property has 100 feet of frontage on Fifth Avenue on the Southeast corner of 55th Street, in the heart of the area of Fifth Avenue favored by the world’s luxury retailers. Vornado also owns 689 Fifth Ave. on the same block.

The property is leased to the Gucci division of Kering (17,100 square feet) for its Bottega Veneta brand through January 2016 and to LVMH (7,600 square feet) for its DeBeers brand through January 2019.

Vornado’s Manhattan street retail portfolio consists of 2.8 million square feet in 63 properties with annual EBITDA of more than $310 million.

Recently, Vornado and its partner Canada Pension Plan Investment Boardinvested an additional $108 million to increase its ownership interest in One Park 45 percent.

And Vornado completed its sale of the 335,000-square-foot Beverly Connection in Los Angeles for $260 million. The new owner is Ashkenazy Acquisition. IREN reported the sale in March.

Another retail property that Vornado is selling is the 1.5 million-square-foot Springfield Town Center, located in Springfield, Va., for approximately $465 million. The sale is pending, and the buyer is PREIT. Vornado acquired the asset in 2005 for approximately $116 million. 

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